Case Law Details
PCIT Vs Sanjay Dhokad (Bombay High Court)
Bombay High Court held that purchases cannot be treated as unexplained expenditure (i.e. fictitious purchases) merely because suppliers have not appeared before AO or CIT(A).
Facts- During the course of assessment, the assessee was asked to show cause as to why the alleged purchases from the said 21 parties should not be treated as his unexplained expenditure. The show cause notice claimed that notice u/s. 133(6) of the Act, had been issued to the said 21 suppliers who, after having been served with the notice had not replied thereto. That spot enquiries were made by the Income Tax Department at the addresses of the said 21 suppliers and during the enquiries, it was revealed that no business was carried out from the premises, and in view of that fact, the assessee was called upon to show cause why purchases from the said 21 suppliers should not be treated as fictitious purchases.
AO passed the assessment order treating the entire amount of Rs.4,99,27,664/- as unexplained expenditure u/s. 69C of the Act, and added this amount to the total income of the assessee, and in consequence of this order, initiated penalty proceedings u/s. 274, read with Section 271(c) of the Act, for furnishing inaccurate particulars of income and conceal income.
CIT(A) allowed the appeal of the assessee. Accordingly, being aggrieved, the present writ is filed.
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